Healthcare in the GCC - A Snapshot

While markets across the globe and the Gulf were facing troubled economic times, the GCC member states (UAE, Saudi Arabia, Qatar, Bahrain, and Oman) have witnessed a shift in the profile of the healthcare market. An ageing population, rapid urbanisation and lifestyle diseases such as diabetes, cardiovascular problems and obesity are on the rise in the Gulf and through the oil-driven economic boom, increased disposable incomes and spending also increase the demand for healthcare services. In 2007, McKinsey and Co. calculated the GCC healthcare expenditure to reach a total of US$60 billion by 2025; most probably an underestimate considering how both the Kuwaiti and Saudi healthcare budgets, for example, are growing.

The GCC healthcare market is projected to grow at an annual rate of 11% by 2015 with Saudi Arabia and UAE being the fastest growing markets. The demand for the number of hospital beds is expected to be 93,992 in 2015, a more than 10% increase in beds from 2010. This is in line with the current GCC average but below the US and European numbers. The demand is also down to the increasing insurance penetration in the GCC, which will result in an increase of patients opting to stay in their home country for treatment, leading to a higher demand in hospital beds. At the moment, due to the lack of beds and qualified healthcare professionals, some GCC countries send as many as 10% of all inpatients abroad for emergency care. For example, in 2009 alone, the UAE spent US$2 billion on overseas medical treatment for its citizens.

Kuwait
The Kuwaiti ministry of Health has recently announced a budget of US$4 billion for 2012-13, a 100% increase from the US$2 billion budget five years ago. This accounts for more than 80% of the healthcare spending in the country. The government is currently operating 15 general and specialised hospitals with the private sector expected to grow moderately in the coming years. Private companies are estimated to take a share of 15-20% of the healthcare spend, but due to the global economic downturn, investment in the sector has been affected to some extent.

Currently, Kuwait has 19 hospital beds per 10,000 people, an undersupply of serious concern given the population growth and the growing disease burden. Although the population is young on average, obesity and related chronic diseases is a huge issue in this small country. For example, obesity levels have reached 80% in women and 70% in men. In January 2011 it was announced that the government was working on a strategy to bolster the healthcare system with 3,500 beds, new laboratory and surgical facilities.

Kingdom of Saudi Arabia
Saudi Arabia is the largest healthcare market in the Middle East. The ministry of Health is responsible for close to 75% of healthcare services, with a budget this year of US$13.5 billion not including a further US$4.3 billion for the large healthcare cities projects spread across the Kingdom. This results in a grand total of approximately US$18 billion in Saudi healthcare spend. If you add another 25% for other healthcare providers, both government and private, the total Saudi healthcare budget is approx US$21.3 billion for 2012-13. At the moment, the moH owns and operates 60% of all hospitals in the Kingdom, but KSA is an attractive market for healthcare investors due to the rapid growth in market size, the demand for hospital beds, with a young, affluent population suffering from lifestyle diseases. Aided by a large budget surplus, the public sector is set to make large investments to support healthcare provisions and complimentary sectors such as scientific research. These kinds of investments will require strong Public Private Partnerships and a strong private sector presence overall. Despite the heavy investment in the healthcare sector, compared to the West, Saudi Arabia demonstrates a severe lack of doctors, nurses and hospital beds with the lowest numbers per population within the GCC.

Qatar
The healthcare system in Qatar is set to undergo major development in the coming years. With the healthcare market expected to expand at a CAGR of 8.4% between 2010-2015 to US$3.2 billion, up from an estimated US$2.2 billion. Qatar has the highest per capita healthcare spending in the GCC. Currently, 35 healthcare programmes, ranging from a mandatory healthcare insurance scheme to the configuration of hospital services, are in the pipeline. The main reason for the increasing demand on the healthcare system in Qatar is the rapid growth in population, especially amongst expatriates due to the 2022 World Cup, and the founding of the mandatory insurance scheme. The Qatari government has got a clear direction and strategy of how to improve the healthcare system in the country and the public healthcare provision is very strong. However, the overall market size is small due the limited population numbers and with the low medical insurance penetration, these are areas of development.

United Arab Emirates
According to Deloitte’s latest survey, the UAE healthcare sector has witnessed rapid development over the past few years and has weathered the global financial crisis relatively well. Despite the economic slowdown, the UAE has attracted major international healthcare investors and the UAE government is increasingly focusing its efforts on attracting prestigious private healthcare providers to the country. The healthcare spending per capita remains high, driven by outpatient services, higher awareness levels and overconsumption of healthcare services by insured patients. 24% of the federal budget in 2011 was spent on social and healthcare development with the total healthcare spending projected to nearly double by 2014.